Manitoba Hydro's Bipole III cost shoots up by more than $1B

Manitoba Hydro's controversial Bipole III project has gone up by $1.3 billion.

Utility says tenders came in higher than expected

Manitoba Hydro said Thursday the cost of building Bipole III will be $4.6 billion, instead of $3.3 billion estimated in 2011. (CBC)

The price tag for a Manitoba Hydro megaproject jumped again on Thursday — a move that will likely lead to more questions about the province's energy plans.

The Crown utility announced a new estimate of $4.6 billion for the Bipole III transmission line, up from $3.3 billion in 2011 and an original figure of $2.2 billion in 2007.

The utility said converter technology is the main reason. The corporation assumed businesses that submitted bids would use new, less expensive types of converters that are coming on-stream in other jurisdictions, but they aren't.

"It is in operation around the world but up until now, in predominantly marine and short-haul applications," said Hydro president and CEO Scott Thomson.

The extra cost will be paid over many years and will only mean a rate increase of 1/3 of a percentage point — or $3 or $4 a year for the average residential customer, he added. That is on top of 3.9 per cent increases Hydro is already planning annually for the next several years to help fund new projects.

Hydro originally wanted to build a much shorter and less expensive transmission line down the east side of Lake Winnipeg, connecting dams in the north with customers in the south. But in 2007, the NDP government ordered the utility to run the line far to the west — almost to the Saskatchewan boundary — in order to protect the boreal forest on the east side of the lake.

The Opposition Progressive Conservatives criticized the move at the time and predicted the cost of the project would jump.

With construction underway on Bipole III, Thomson said the utility has no intention of going back to the government to ask it to reconsider an east-side route.

The transmission line is needed, Thomson said, to accommodate growing domestic energy demand and to increase reliability. The province's two existing main transmission lines run between Lake Winnipeg and Lake Manitoba. Having a third line in a different area protects the power supply in the event of an outage cause by a storm or other cause, Hydro has long maintained.